Notes on the Wine Industry:

Like many people I appreciate a nice glass of wine before dinner or even during the repast should I be too busy finishing up some task during the cocktail hour. My local grocery store has an impressive aisle devoted to wines. A shopper could waste lots of time studying all the labels, all the staid or quirky names, and, of course, the many varietals available, like sauvignon blanc, merlot, pinot noir, chardonnay, cabernet, riesling, or chablis. I prefer to purchase bottles from the lower shelves, the ones in the $10 to $12 and under range. That has always been my budget preference, but now I find that other people, the ones who rarely looked at a bottle priced below $30, are also looking for good quality wines in the lower price bins. This is an industry-wide phenomenon, likely brought about by the effects of the global recession, but one that may not be temporary. For, indeed, there actually are some really good wines that are relatively inexpensive.

In addition to the current financial downturn causing wine consumers to trade down, there is the exacerbating circumstance of unsold inventories from the 2007 and 2008 vintages while a grape glut looms for 2009. In fact, 2009 looks to be a banner year for vineyards almost everywhere, whether in Europe or California, Australia or China. Several firms in the wine business have declared bankruptcy in Australia, and producers of champagne in France are in difficult negotiations over prices and allowable harvesting amounts. The wine trade group in New Zealand has imposed a harvest limit to guard against oversupply and possible damage to the country's reputation for producing superior wines. Weather conditions have been so good for most vintners that 2009 could well be scored as a magnificent vintage year; good news for those, the ones with sufficient credit resources, able to sell and/or crush the grapes, ferment and store, bottle and send on the alcoholic goods to customers and retailers. Some growers have already had to let their grapes rot on the vines; for there were no winemakers willing to buy the fruit, incur the processing expenses, and await sales in these uncertain times.

Wineries exist in all shapes and sizes, from tiny farms which produce a few bottles for home consumption to huge international conglomerates like California-based E&J Gallo, which produces, exports, and imports wines through operations in dozens of countries from the U.S. to Spain and New Zealand. Paris-based LVMH, a luxury goods concern with interests in champaign brands like Moet & Chandon and Veuve Clicquot, is apparently looking to buy up some of the winemakers struggling in the current difficult situation. Yet, LVMH's wine subsidiary may itself be the subject of a takeover, as Diageo, a London-based owner of well-known beer and alcoholic beverages brands, is looking to add names like Dom Perignon and Moet to its own lists.

The United States is not the top producer, importer, or consumer of wines. Italy and France make and export the most wine; while the United Kingdom, which also boasts a small wine industry, leads as the top importing nation. China is new to the industry, with as yet few top-drawer wines, but is expected to become a force within a couple of decades. Canada produces some fine wines but is now embroiled in a labeling controversy over whether the term 'Cellared in Canada' should really cover Ontario-bottled blends composed of more than 70% imported grapes.

Viticulture is largely based on European vines grafted to disease-resistant North American rootstock. While it is an expensive undertaking to establish and maintain a vineyard, it only takes a few years before the first wines may be bottled and labeled. Selecting particular grapes to grow and to blend in forming a particular wine is a science and art all to itself. Technological advances now enable vintners to view enhanced aerial and satellite imagery of vineyards, to keep track of data on viruses, soil composition and microhabitats, and to maintain accurate marketing and compliance records. Marketers frequently make mention of the supposed health benefits of moderate consumption of wine.

Eric Asimov, "Where Anxiety Is All That's Flowing", New York Times/The Pour
Christopher Redman, "A Tough Vintage for Champagne", Time Magazine
Chris Mercer, "New Zealand Winegrowers limits harvest", Just-Drinks
"Outsourcing terroir", The Economist
Thomas Ulrich, "From Soil To Sales", Wines & Vines
William Lyons, "Diageo braced for protests amid talk of 11bn LVMH bid", Scotsman Whiskey News